Stage 2: Deduction of Title Flashcards
what is deduction of title?
the seller’s obligation to prove ownership of the property
Documents should be less than 6m old and generally shared before exchange of contracts
what is the first step?
- First step is to always check whether the land is registered or if there is a pending application for first registration.
what may a solicitor uncover when checking if the land is registered?
o There may be a caution against first registration. This is a warning there is an interest in the land.
how is proof of ownership of registered land obtained?
- Seller downloads a copy of the register and gives this to the buyer
what is the pre-contract package?
- The seller usually sends proof of ownership and the draft contract to the buyer at the same time (the ‘pre-contract package’)
re: registered title
what is the official copy?
HMLR register of title
re: registered title
what is the title plan?
HMLR copy of property plan
re: registered title
what information is on the official copy?
o Edition date = when title was last updated by HMLR (i.e. mortgage or sale)
o Search from date = date and time the OC was obtained
o Property register
o Proprietorship register
o Charges register
re: registered title
what information will be on the property register?
- Address, title plan, freehold/leasehold
- Any easements or rights benefitting the land (i.e. grant to right of drainage)
- Certain exclusions from title i.e. exclusion of right to light, exclusion of mines and minerals (would need to do a mining search)
re: registered title
what information will be on the proprietorship register?
- Current owners’ their address, class of title
- If sold after 1 April 2000 the price the current owners paid
- If the current owners gave an indemnity covenant
- Any restrictions on the owner’s ability to sell (i.e. pre-2003 cautions and inhibitions, post-2003 notices and restrictions)
- Class of title
re: registered title
what information will be on the charges register?
- Identifies incumbrances on the land i.e. covenants, easements, charges over land, leases, notices
who and when determines class of title?
This is determined by HMLR on registration.
re: registered title
who guarantees title and what is the effect of this?
- State guarantees title and so if there is a defect with title compensation may be payable.
re: registered title
what are the classes of title for freehold land?
- Absolute
- Possessory
- Qualified
re: registered title
explain absolute title
best title. proprietor’s ownership is unequivocal and cannot be challenged (subject to any entries on the register)
re: registered title
explain possessory title
proprietor is in possession but has lost the deed or claiming adverse possession. The proprietor will be subject to all adverse interests existing at the date of first registration.
re: registered title
explain qualified title
HMLR think there is a specific defect which the Registrar feels cannot be overlooked / cured by grant of absolute title.
re: registered title
what effect does the title have?
Title will affect securing a loan
re: registered title
is title fixed?
- It is possible to upgrade title.
re: registered title
what does a restriction indicate?
- A restriction indicates that the proprietor’s ability to sell the property is limited/they must satisfy something before disposal
re: registered title
what form can a restriction take?
- Restriction can be permanent, time-limited, absolute or conditional
re: registered title
give some examples of some of the main restrictions
- Co-ownership restrictions
- Lender restrictions
- Restriction by court order
re: registered title
explain co-ownership restriction
if the BI is held as TIC, there will be a restriction
re: registered title
explain lender restrictions
bank’s consent would be required if they are leasing or selling part of the property. Not required if selling the whole property as the loan will be paid on completion and restriction will be removed.
re: registered title
give an example of restriction by court order
i.e. not to sell the house in family proceedings
re: registered title
explain notices
- Notices are how third-party interests are protected. These will need to be cleared from title before the property is purchased.
re: unregistered land
what are the stages to deduction of title?
- Seller (or possibly mortgagee) provides solicitor with title deeds
- The seller’s solicitor will assess the title deeds to determine whether any of the transactions should have triggered first registration. If so, the property will need to be registered.
- Seller’s solicitor ascertains good root of title (GROT).
- Seller’s solicitor prepares epitome of title
re: unregistered land
what are title deeds?
- Title deeds = deeds which prove ownership and ownership history inc. conveyances, mortgages, assents, deeds of gift
re: unregistered land
what are the requirements for good root of title?
Requirements for GROT:
o Shows who owns the entire interest (inc. legal & equitable) being sold;
o Contains a recognisable description of the land;
o Does nothing to cast doubt on the seller’s title; and
o Is at least 15 years old
re: unregistered land
if the conveyances states ownership of the entire interest, what will it say?
The conveyance will state the Vendor is ‘seised of the property…for an estate in fee simple and is selling to the purchaser’ and the land is being conveyed as ‘beneficial owner to the purchaser’
re: unregistered land
what is the preferred GROT?
Conveyances (preference) and legal mortgages are generally the best root of title because they effectively offer a ‘double guarantee’
re: unregistered land
why are conveyances/mortgages the preferred GROT?
o This is because when the property was sold/mortgaged the buyer/lender would have investigated title for a minimum of 15 years. As the current buyer is also looking back at least 15 years, there is a cumulative minimum of 30 years’ worth of searches. Where the property is gifted, it is unlikely such investigations took place and so no double guarantee.
re: unregistered land
how many GROTs are needed?
- Only 1 GROT is needed, once it has been identified older documents are not necessary, except documents which refer to third party rights in an earlier convenance (the buyer’s solicitor is entitled to call for a copy of this)
re: unregistered land
what is the epitome of title?
- This is a schedule of documents from GROT to present.
re: unregistered land
what structure should the epitome of title take?
- The list should be numbered and in chronological order + documents enc.
re: unregistered land
what should the solicitor check when preparing the EOT?
o Unbroken chain of ownership from GROT to present seller.
o Consistent description of land
o Stamp duty
o Incumbrances
o Execution
re: unregistered land
explain EOT ‘unbroken chain of ownership’
If there has been a change in ownership, land can only be transferred by deed so a copy of the deed would be needed.
If the proprietor passed away, the property would vest in the PR and so GOR would be needed to needed to evidence their authority.
re: unregistered land
explain EOT ‘stamp duty’
complex but in summary, if a previous purchaser did not pay stamp duty, they may not have acquired a valid legal title to the property. The new purchaser wouldn’t be liable to pay the monies owed, but the defect in title could pass to them.
re: unregistered land
explain EOT ‘incumbrances’
o (i.e. easements and covenants) ‘expecting and reserving’ suggests and easement, ‘subject to’ suggests and incumbrance
re: unregistered land
explain EOT ‘execution’
ensure formalities were complied with i.e. deeds must be in writing, clear they are a deed, signed in the presence of 2 witnesses and delivered as a deed. Pre-1990 deeds had to also be sealed by the maker before it was signed. If not, it could not convey legal title.
